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How I Got the $84k Hepatitis C Drug for $1500 by Buying It from India (alternet.org)
351 points by mataug on May 8, 2016 | hide | past | web | favorite | 342 comments

Something to keep in mind is the population that typically has chronic Hep C requiring this drug. It's IV drug users who share needles. Think they have $84K? Nope. Think they have insurance? Nope. Guess who pays for it. Oh that's right, it's Medicaid! It's you, the taxpayers. Where is there a large concentration of people that have Hep C? Prisons. Guess who pays for it then? Still you! The prison systems are obligated to provide health care and treatments in accordance with community standards of care, which they do. They have treated many people already who meet the criteria of disease progression to qualify for it. Still think Gilead should be charging this much for it here and not elsewhere?

Actually a significant population in the US was infected by blood transfusion; the US didn't start properly/universally screening blood and taking precautions for hep C until 1992.

This is why there's a spike in infection rate among older people, and why hep C is considered a looming cost crisis for Medicare -- we don't yet know the full extent of the infectious disaster that was unscreened blood, but it's ticking away inside anyone who received a transfusion prior to 1992.

There's something rather unsettling about the realization that Jehova's Witnesses had a point about something once..

If you're getting a blood transfusion it's usually because you need it. I'd take hepatitis C over death any day.

A broken clock is right twice a day.

That's the 10% that the insurance companies have already treated.Most of those waiting now are the F1 and F2 variety.

It is expensive, but still cheaper than treating someone in the US with HepC for life, which Medicaid is already paying.


Copenhagen theory of ethics:

If person A ignores a problem, but person B comes up with an expensive solution to the problem, person B is the monster because he should have come up with a cheap solution. Person A is completely innocent.

(Obviously this is nuts.)

Is there a way to take the taxpayer money being spent on medicine that's priced high to recoup the research investment, and shift it to directly funding the research in the first place?

Obviously you'd have to spend a while funding both R&D and Medicaid/etc, while the new drugs are in development and the old ones are still under patent, and I'm sure there's other details I've missed, but it seems like there should be some way to make the system make more sense.

I don't think you could get that to fly politically. While it is true that drugs require high prices to recoup research cost and that drug patents allow drug companies to charge those high prices, they don't just recoup prices. They charge as much as they can. From the point of view of trying to save as many people as possible for the money, that sucks, but from the point of view of encouraging investment in drug companies it is seen as a necessary evil.

I won't try to rehash all of the permutations of ways that might work (just search HN for any discussion of drug companies and patents and you will be able to enumerate them). I suspect that there are ways to improve the present system substantially, but I concede that the problem is much harder than I can solve. Hopefully someone will be able to do it some day.

> They charge as much as they can

How does it work in European countries where health care is (mostly) paid for by the government? Do these companies still charge the same prices as in the US?

> Do these companies still charge the same prices as in the US?

The majority of global R&D happens in the US market, even though the entire world benefits from it. So pharmaceutical companies have come to expect to recoup their R&D costs from the US market. Ultimately, this means that European markets benefit from the research without having to shoulder the bulk of the costs from it.

If they couldn't do that here, then yes, they might adjust their business models and try and charge more in Europe and India. But as mentioned above, India doesn't recognize patents, and since the R&D isn't taking place in Europe, there's less of a need to charge the same prices there. And because there isn't one single European market, its more complicated to price drugs there in such a way as to reliably turn a profit (after accounting for R&D) in each individual country than it is in the US, where insurance players are licensed by state but the pharmaceutical market is otherwise roughly uniform across all 50 states.

This is utter non-sense.

Companies charge as much as they can, they don't follow some altruistic "we love Europe" plan.

I understand your point though: Of course it's easier to bask in American exceptionalism than facing the truth that corporations rule the US and the only human value they are interested in is the amount of dollars extractable through any means imaginable.

> some altruistic "we love Europe" plan.

Nobody said anything about altruism, or 'loving Europe'. I don't know where you're getting either of those ideas from.

> Of course it's easier to bask in American exceptionalism

This is hardly a claim of American exceptionalism. It's a non-normative observation about the existing structure of the markets. It is not a statement that this is how it always must be, or that this is how it should be. It is merely a description of what currently is.


Back in NZ, we have PHARMAC, which is basically a centralised drug buyer for the country. It works remarkably well at keeping drug prices low https://www.pharmac.govt.nz/ - though tends to miss some niche stuff.

The Australian Federal government has a Pharmaceutical Benefits Scheme, and U.S. pharmaceutical companies have been trying to undermine it for years.

Sadly for these companies, and fortunate for the vast majority of Australians, it is so popular and successful that any attempt to undermine it puts the government at risk of being turfed out in the next general election.

The Abbott government tried to force through a hair-brained GP co-payment and it was so unpopular that even when it was scrapped they eventually had to replace the Treasurer and Prime Minister for fear of being routed in the next general election.

Of course not.

The drug from the original company is expensive everywhere, what India has is generics, which in their turn might lower the price of the original drug because of the competition. It also lowers the incentive of selling the original drug there at all (and consequently allowing the government to press for agreements). I have some unpopular opinions regarding the subject...

Actually, India basically refuses to recognise patents for a wide variety of pharmaceutical products. For a long time they refused to recognise patents for drugs that combat AIDS and a thriving market for generics sprung up.

There was a lot of posturing and complaining by pharmaceutical companies in the U.S. and the U.S. Government tried to heavy the Indian Government, but to no avail.

When it became apparent that the Indians weren't going to budge, and with a growing realisation that other nations would ether do the same thing or import their drugs from India, the companies agreed to drastically reduce their prices on "humanitarian" grounds. Now they still make massive profits, just they are less massive than they once were.

This is now happening with academic research.

Nobody will shed any tears because greedy multinationals make a lower profit to ensure less people die from disease. Nobody will weep over Elsevier's reduced earning if it frees up necessary information and research findings so science can progress for the benefit of all mankind.

The entrenched interests of rich, arrogant corporate executives and business owners in first world nations are finally being disrupted by poorer nations who don't care about this group of people. But that's what happens when you gain an attitude on I weaning entitlement - you eventually overreach so far you come undone, and nobody feels any sympathy when it happens.

While I tend to lean more to your side of the argument, the devil's advocate in me has to point out the fact that you leave out the massive costs of research, development, clinical trials / fda approval, etc. that go in to getting a drug to market.

This not to mention all the extra capital needed to fund research into all of the drugs that never make it to market before a company finds something that works.

This ignores the fact that the expensive, risky research is often funded by public money instead of by the pharmaceutical companies. So, the taxpayers pay for the research until it shows progress. Then it gets patented and sold to a large company which sells it back to the public for $1000/pill.

It's a pretty gross abuse of the original idea of patents.

The expensive, risky part of drug development is not the portion that is publically funded. Yay! You've found a compound that appears to shrink tumors when directly applied to them on glass slides.

Now, figure out what the correct dose is, how to get it into a mammal so that it's not metabolized into uselessness, how much you can safely give the mammal.

Now, start again with humans and hope you don't get to the final stage only to find out that it's not as effective as existing treatments or has side effects that will open you up to lawsuits.

Finally, once you've done all that, scale out the production of your compound such that you can prove that every dose meets FDA quality requirements.

To be fair the risky research side is relatively low cost. It's the development part - putting drugs through clinical trials that costs a hell of a lot. And its usually drug companies that pay for that.

Given that people would still die or become very sick from disease, I think that medicine would progress - whether at the same rate, I'm not sure but given Western nations other than the U.S. pretty much all don't have hangups about their government funded health systems, I suspect it wouldn't be all that bad.

I'm fairly sure most drug companies now spend more on marketing than on R&D/testing.

If you're going to parrot Marcia Angell, at least get the substance right: They spend more on marketing and administration than they do on R&D. Where "administration" is stuff like IT, HR, etc.

I've never read her work, so I'm hardly parroting her. IIRC I've read about this in a few news articles about pharma finances, and in Ben Goldacre's "Bad Pharma". I don't know whether the marketing/sales figures include administration, but it does appear to be true, and I'd be inclined to think it's bad...

Most drug companies sell generics because they don't want to enter costful R&D game.

Or they try to prolong their patents or very slightly change the formula of an existing drug so they can patent it again: https://en.wikipedia.org/wiki/Generic_drug#Prolongation

One of the problems with the patent system is that it pushes medical research in the direction of drugs because they are easier to market than alternatives such as knowledge of medical procedures.

There still needs to be incentive to lower the cost. For example, to lower costs of clinical trials, companies can invest more in computer simulations and find other ways to reduce those costs. Also this might also force big pharma companies to collaborate more with each other rather than re creating the wheel.

This is one of the "problems" the TTIP attempts to "fix", isn't it ? That Indians get access to cheap medication.


The future lies in "biologics", which unlike small-molecule compounds, cannot be (that) easily copied/manufactured. Initial and continuous capital costs prevent easy "piracy" and that is where the majority of large-pharam/biotech R&D is headed.

My father is currently under treatment (for around 50,000 EUR) He's not an IV drug user, never was, most probably it was a dentist who infected him many years ago.

Don't oversimplify things like this, there are lots of situations you aren't thinking about..

He's not oversimplifying. He's not saying that all Hep C patients are IV drug users.

He's just staying that a lot of Hep C care is taxpayer funded, and that Gilead is therefore price gouging the American taxpayer. That your dad is also being price gouged, over in Europe, is just icing on the cake.

You don't think it's fair to price a product relative to the wealth in a given country? I think it's quite fair to be honest.

Certainly. And it should be just as fair to allow parallel imports of everything. Want to charge more than [retail price B + transport cost B->A + import tax A]? Guess what, the market is going to take care of this for you.

Of course, that just means they'll sell at the expensive price everywhere.

See the import tax that I included in the calculation? IMO this should be the way to solve this from a humanitarian standpoint. If a government wants to solve medical issues of poor countries, it can work together with drug corporations, dictate the price points (i.e. manufacturing+logistics without R&D) for offering these supplies and then protect the own market through import taxes on these products. But the point here is: It needs to be a transparent, i.e. democratic, process. The way it works now is just shady and anti free market.

It should be priced according to ability to pay based on income. The same is the reasoning why the drug is so cheap in other countries, their people can't possibly afford the prices. So it makes no sense for citizens of wealthy countries to have to pay huge markups if they don't have the money. It makes no sense from an economic perspective to force people to go into bankruptcy just because they got sick.

That's only fair if you believe that the seller has the moral right to maximize their earnings. I think that's questionable across the board, but certainly in the pharmaceutical industry.

As in: the idea behind capitalism (the reason we put up with it) is not that price-gouging is some fundamental right we should worship, but because capitalism works. What's that mean? It efficiently allocates resources. How does it efficiently allocate resources? By letting a fluid market with many competing buyers and sellers figure out an appropriate price.

Notably, patents of life-sustaining medicines utterly destroy that cornerstone of capitalism. People can and will pay almost anything to get that drug, so the seller can charge what it wants - that's not capitalism as it's supposed to work, that's a hostage scenario.

I don't know what the best alternative is, but I'm convinced that there are many trivially better solutions to allocating resources to medical research, efficacy testing and production than what we're doing now. Every social network, things like google's pagerank, scientific journal impact ratings - all represent alternative means to determine worth in a competitive fashion; and even competition isn't strictly necessary - for some scenarios plain old raw computation to solve for the optimal solution may be possible nowadays. We're not even trying to improve the status quo.

> Notably, patents of life-sustaining medicines utterly destroy that cornerstone of capitalism. People can and will pay almost anything to get that drug, so the seller can charge what it wants - that's not capitalism as it's supposed to work, that's a hostage scenario.

I don't think it is appropriate to compare a drug company that created a life-saving drug to a hostage taker. And in this scenario it is particularly inappropriate, because they are charging less for the drug than the previous best treatments cost!

Furthermore, there is an alternative here. The patent only covers this one cure. You are welcome to go out and spend $2-3 billion to try to create your own drug. (But that would be pretty risky, wouldn't it? And good luck raising the money if you plan on giving the drug away.)

Right, so in this case there was a tiny modicum of competition, and the smart company selling the drug priced their product appropriately.

However, that does not mean that they (or some other organization) couldn't have developed this drug for less.

The question isn't whether it's better that what came before, the question is whether it's efficient. If there were many buyers and sellers, you'd have some faith that is at least approximately efficient.

But with just one seller, they could recoup their costs many, many times over. That's terribly inefficient - those resources could be better used elsewhere.

And it's quite a bit worse than that - by being so inefficient, you're creating all kinds of perverse incentives. Instead of trying to find and create a worthwhile drug, the aim is to find those drugs with captive audiences. The Martin Shkreli saga illustrates that quite blatantly.

The appropriate benchmark is efficiency, not whether the drug at the offered price is better than nothing.

I think there's some middle ground that could be found here. For arguments sake, how about:

1. A drug company can charge whatever it wants for a drug until some predefined multiple of the cost of developing the drug is recovered.

2. After that point, the patent expires and its up to the free market to determine prices.

Set the multiple of R&D costs high enough that it allows for the low success rate of drug research, and you have a model that still encourages risk taking whilst preventing profiteering.

"The cost" is a gameable concept.

Also, this proposal means that while the patent is not expired, production is still monopolized.

And there is the issue of testing vs. research. There is an argument to be made that drug development isn't the hard part (or at least not always). The hard part is figuring out how to use the drug, and doing clinical trials to prove efficacy and safety.

E.g. we currently live in the wonky situation where there is little incentive to discover new uses for existing out-of-patent drugs. It's much more worthwhile to find a new drug that does the same thing.

I think patents-as-monopolies are a bad idea. A citation-based subsidy and/or fixed license fee, preferably on a decreasing schedule with a capped or only slowly growing integral would align motives with outcomes more clearly.

I mean, I don't see the problem if research becomes independently specialized from exploitation.

One aspect of the patent system is that the government or non profits or whatever could do drug development, get patents and then give away licensing.

Would doing that put an end to commercial drug development? Or would commercial drug makers continue to seek treatments where they saw opportunities to profit?

Sofosbuvir is a really great test of how we reason about this stuff. The price is high and easy to balk at, but it's cheaper and better than the previous treatment. Cheaper and better are clearly compatible with the profit motive. So we are left with our intuition that the price is unfairly high. I think part of the answer is to look at how medical payments are structured.

The best alternative is really quite simple: public funding for lifesaving medicines. This model also works for the provision of medical care and is used throughout the entire developed world, with one exception.

As far as I know, this is not true anywhere in the world. What drugs out there have had their development and trials fully (or majority) funded by governments, either in Europe or---apropos here---India?

Huge, huge amounts of drug discovery is funded by governments[0] around the world. Pharmaceutical companies step in to fund the trials after the promising results come out. A lot of the trials take place in India under ethically concerning conditions[1].

[0] http://www.ncbi.nlm.nih.gov/books/NBK50972/

[1] http://www.who.int/bulletin/volumes/86/8/08-010808/en/

Capitalism uses a low value of human life for workers compensation and a high value when selling drugs. Perhaps we should force the maximum charge to be their lowest paid worker's income for the period of treatment ...

Capitalism allocates resources efficiently without external forces like patents. Patents are a fix to force capitalism to be more socially responsible with sharing of knowledge.

One look at the UK housing market shows that capitalism doesn't efficiently allocate resources. (But then it is anything but a free market).

Not sure if this is ment against "free" health care or you are just noting how corrupt the U.S. health system is.

So India does not have prisons or similar laws for treatment of prisoners?

Incarceration rate (Prisoners per 100,000 population):

United States: 698

India: 33


(1) As someone who was following the market when Gilead paid $11 billion for PharmAsset, it was not a sure thing that it would be first to market or a premier drug. They announced $137/share on November 21 for a stock that opened at $65.49 on November 11. People like to point out how much money Gilead made on the deal, but that is Monday morning quarterbacking on something where they easily could have lost billions.

(2) The article claims Harvoni was acquired. That is not really true. Sovaldi (sofosbuvir) came from the Pharmasset acquisition. Harvoni is a combination of sofosbuvir with ledipasvir, a drug discovered at Gilead.

The combination of the two is a key part of the treatment; sofosbuvir was still taken with interferon (and ribavirin) for genotype 1 HCV, the most common form.

Treatment for genotype 1 HCV, without interferon required ledipasvir. The notion that Gilead contributed nothing scientifically to Harvoni is false; they provided a crucial component to the all-oral treatment of HCV genotype 1.

As someone who was following the market when Gilead paid $11 billion for PharmAsset, it was not a sure thing that it would be first to market or a premier drug.

This is a fantastic point. I remember when Gilead announced their acquisition of Pharmasset. They were ridiculed in the press. How could they be so stupid to pay that much? Many people thought that $11B was as good as gone.

That's the risk involved with drug development. It's like VCs, you spend a ton of money on a lot of investments, most of which fail. Unless you get a few huge winners, it's not a feasible business.

Gilead has developed the first drug since penicillin to cure a major disease and people think the price tag is too expensive.

In the modern world, it's not ideal to create a drug to cure something. Once people are cured they no longer need your drug. That's why we have so many drugs like Lipitor and Viagra that treat symptoms but do not cure.

The "problem" with Sovaldi/Harvoni is that the patient only takes it for ~90 days, and then they're cured.

The drugs are cheaper than regular treatment of Hep C - which ends in liver transplant. Do people think the price tag was just random? No, it's because this is a price at which the taxpayer saves money by curing the disease vs. blood transfusions, liver transplants, lost economic value, etc.

Not to mention that the waitlist for a liver transplant is getting halved as we cure Hep C.

As we slam Gilead the other really evil pharma companies like Pfizer are taking notes and patting themselves on the back for creating drugs whose end goal is to addict the consumer.

I worked for a company that developed some PA criteria for these drugs, I can assure you a lot of debate went into this criteria.. these two specific drugs are probably the most hotly contested drugs. If we sold them at the 84k price tag to anyone that COULD use it, the entire insurance industry would go bankrupt, literally. Not even an exaggeration. While your logic is sound, the drug is cheaper than a liver transplat... not everyone who has Hep C ends up getting a liver transplant. There's a huge gap between the number of people who COULD use the drug (and have a MUCH better quality of life), and the people who are most qualified for it. The drug companies are not doing the government a favor here... sorry.

Another side conversation that's interesting, is who takes the $84k hit. There's sound logic that it's cheaper to give the drug NOW vs paying for surgery LATER... but what if i'm not your insurer when you need it. With obamacare, you can't be denied because of pre-existing conditions... so it's interesting math.

Do you have a sense of the production costs?

If they aren't very high, the US government could start making the company look like jerks by offering $50 billion for the patent. I'm pretty sure they would be able to calculate a nice return based on a payment like that.

The math works fine for that, there's ~3 million people just in the US to treat, paying $50 billion would save a substantial amount just treating those patients. Of course, we don't run our government based on math that makes sense, so it's a pipe dream.

> the US government could start making the company look like jerks by offering $50 billion for the patent

Pretend you were in charge of Medicare/Medicaid. The NPV of the lifetime care cost of the HepC symptoms of each HepC patient on your rolls is $X. You want to encourage someone to develop a cure for HepC, so you put out a price bid for what you will pay someone who shows up with a cure. What price do you offer?

I offer $Y, the lowest amount I think I can get them to accept.

In the hypothetical, you are offering a price before anyone has developed it. "You want to encourage someone to develop a cure."

What price do you offer for someone who shows up with a cure?

I don't, there's a lot of people in government trying to make change (Bernie Sanders for one!), any public information that is out there, is probably about as twisted as Enrons finance sheets.

> In the modern world, it's not ideal to create a drug to cure something. Once people are cured they no longer need your drug. That's why we have so many drugs like Lipitor and Viagra that treat symptoms but do not cure.

I don't think that's a reasonable conclusion at all. One of the main reasons we have so many drugs that treat symptoms is because cures are absurdly difficult to find while treatments can be found accidentally (Viagra was originally intended to treat hypertension).

Funding research into cures is funding your own bankruptcy. Pfizer execs would jump a the opportunity for "Pfizer" to be the name of the company that cured cancer. But the reality is, hunting for cures is expensive with little chance of payoff. That's not how you stay in business.

In the modern world, it's not ideal to create a drug to cure something.

The drug companies produce the drugs they can. They are nervous enough about having enough blockbusters in their upcoming pipeline that if they could make something that cures a given cancer, they would.

We've eaten the low-hanging fruit. If any of us went back in time a hundred years we could come up with a polio vaccine just by trying a few times to remember what we learned about it in grade school. Modern diseases that don't have a cure in a pill isn't because someone never thought of doing it; it's because it takes hundreds of scientists doing lots of long trials to find something that improves outcomes by 10%.

This is yet another perverse collision of care and market regulation. Other examples abound. Why do we accept this? Do we even dare think of alternatives?

What if western governments stop enforcing drug development intellectual rights? Not going to happen before hell freezes over, but let's have a short thought experiment.

Quality health care for all would probably blossom thanks to more access to affordable drugs than ever. Drug development would probably slow down significantly without compensating measures. But would that be so bad? Medical research is increasingly a game of diminishing returns... Many but the rarest disease puzzles have been solved already. And the huge profit margins show the current drug development system has proven inefficient handling these rare corner cases. Think https://en.wikipedia.org/wiki/Alexion_Pharmaceuticals . With more patents starting to expire, the existing drug development model will only get more inefficient...

Aren't there more efficient ways to incentivise drug research?

Crazy idea... Bootstrap an open source drug with maecenate and/or public funding, or market an existing generic with a sympathetic history. Make it super easy for people to donate something extra on top of the drug price. Think a tip at the pharmacy, directly to the researcher's drug development budget. Their drug cured them or their loved ones! Put a picture of the research team on the packaging. Show people these researchers are heroes.

> What if western governments stop enforcing drug development intellectual rights?

No new drugs. Pretty simple.

Now you ask, is that a bad thing? well yes, yes it is. Right now, we are running out of (or have run out of) top end antibiotics.

Partly from over use (I'm looking at you America.) mostly from using them to get much higher yields in farm animals (yup, thats right, last line antibiotics are being used on pigs, so they can be packed in much higher densities. )

So what I hear you say? Well TB thats what. There is a resurgence in TB, the white death. Now, you might be content with each lung collapsed in turn, in a vein attempt to cure it[1]. However I'm not.

1 in 3 people get cancer. The survival rates are not good. Loads of people are diabetic. (mainly because they eat shit and are fat(unless its type1 which is genetic))

Opensource model is just bollocks. I don't want to be treated by some drug thats only had patchy test coverage. I don't want to be beholden to some amateur who thought it'd be good to reinvent for the billions time penicillin.

Who is going to pay for the time? its not like you can provide charge for support is it?

No, the way forward is actually having a proper handle on insurance. Here in the UK, drugs are purchased nationally[2] but more importantly you only pay a nominal upfront fee. Its not more expensive, in fact its hovering around 6% of GDP compared to 18% for the US (and with much better care too)

[1]http://journal.publications.chestnet.org/pdfaccess.ashx?Reso... [2]https://www.evidence.nhs.uk/formulary/bnf/current/5-infectio...

> No new drugs. Pretty simple.

I doubt that. There's no reason why the same research couldn't be academic research.

Global spending on drugs research is only $77 billion a year. Take the 20 richest countries in the world and that's less than $4 billion a year each. That's less than half the UK's EU rebate.

(EDIT: not enough coffee to add correctly)

Bingo. The private profit motive isn't the only way to get things done. Two of the greatest scientific and engineering feats of the 20th century, the atom bomb and landing on the moon, were both government run and funded.

Not sure if the war motive is much better than the profit motive, though.

To stretch the analogy, lives are being threatened in war as they are also threatened by medical illness.

Americans brought the end of antibiotics onto themselves. Even if the world found new antibiotics, their culture is just not amenable to use them responsibly.

How to prevent them from spreading their new diseases to the rest of the world?

Let's follow the advise from their next president and put a wall around their country.

>Quality health care for all would probably blossom thanks to more access to affordable drugs than ever. Drug development would probably slow down significantly without compensating measures. But would that be so bad? Medical research is increasingly a game of diminishing returns...

If that's true then this problem will resolve itself in a decade or so when these drugs go off patent.

I wouldn't call cancer, heart disease, alzheimer's, ageing etc "the rarest disease puzzles", yet I'm not satisfied with the status quo of medical care for these problems.

Mainstream access to all existing drugs would still be a hugely more favorable outcome than the "chance" of new drugs at outrageous prices.

Don't we get cheap drugs when patents expire? Are you saying we should invalidate all existing drug patents today and cease R&D rather than wait for patents to expire?

No, the manufacturers apply for a new patent for using the drug to treat a different condition, which still keeps generics out of the market.

With a few exceptions, that's pretty much untrue.

I'm conflicted about this article. On the one hand, the pharmaceutical companies gouging ordinary Americans is abominable. Doing something to circumvent their greed is something to support.

On the other hand, if enough people exploit loopholes like this, and the pharma company actually felt a significant drain in revenue, they may decide not to license the manufacture of these drugs in India at lower prices. If $84,000 seems unreasonably high in the US, imagine how out of reach it will be in India, where the cost of living is much lower.

So it's fair for a multi-billion dollar company to exploit the "global market" by farming work out to 3rd world countries...

But not for a customer who is literally dying to take advantage of that same "global market" to save himself?

Like everything else in the global economy, laws are only enforced to protect the strong against the weak, and yet we wonder how all the wealth is accumulating in the hands of the few.

> So it's fair for a multi-billion dollar company to exploit the "global market" by farming work out to 3rd world countries...

That makes sense. It is interesting that when usually there are "anti-globalization" protests shown in the media, the protesters are presented as fringe idiots, violent, with facemasks and so on. Sort of implying "look at these crazies not wanting countries get close to each other, trade and be friends". The truth is globalization is overloaded to apply only to large companies. And usually the more they "globalize" -- the more they create inequality and pain for those at the bottom. So then they also end up increasing border controls, formulate various laws and agreements and ram those through each country's legislature to protect segmentation and control of market.

All evidence I've seen points to a massive reduction of poverty "at the bottom" (the actual bottom, not developed world's bottom) as globalization has increased in the last few decades. On what do you base the claim that it has increased pain?

I didn't take a position one way or the other in my comment. But if anything, I definitely did not support the company. I was more concerned about the billions of people in other countries who will suffer because they will lose access to medicine even more. Some of the comments below pointed out that India had the ability to break patents if the government considered the drugs overpriced, so I'm not sure that's a very valid concern anymore.

That's a very interesting point! Is also applicable to digital content restrictions (pricing differences).

How is giving people jobs exploiting them again?

I think a way to state this that you can't semantically object to is:

We live in a society in which those who control large corporations argue that it is virtuous to relocate significant portions of the business to locations which are cheaper due to more lax or nonexistent laws protecting workers and/or the environment, and thus consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.

This opens up a counterargument that it should just as equally be virtuous to purchase medication from places where the retail price is cheaper due to more lax or nonexistent laws protecting intellectual property claims in pharmaceuticals, by which process consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.

After all, protection of workers, protection of the environment and protection of intellectual property are all sliding-scale values; if it's fair for one person to do arbitrage on one of these in order to make money, why shouldn't it be fair for another person to do arbitrage on another?

>We live in a society in which those who control large corporations argue that it is virtuous to relocate significant portions of the business to locations which are cheaper due to more lax or nonexistent laws protecting workers and/or the environment, and thus consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.

I don't think this is entirely fair. Some of the lower cost can surely be attributed to lower cost of living in those locations, not necessarily due to more lenient laws.

In that case, it isn't comparable to arbitrage over IP.

By the definition of exploit. http://www.dictionary.com/browse/exploit "to utilize, especially for profit; turn to practical account"

Well that meaning of exploit doesn't have the negative connotation clearly implied above, which requires harm.

"The suicide rate at Foxconn during 2010 remained lower than that of the general Chinese population at the time as well as all 50 states of the United States."

What is the rate of employers whose practices cause a large group of their employees to jump off their building all at once? I can't remember ever seeing that headline in U.S. papers except referring to China and such. Must be rare here.

I wonder what the rate of mass suicide is in general for "all 50 states of the United States" vs Chinese companies like Foxconn.

>large group of their employees to jump off their building all at once?

Didn't happen at Foxconn. They were all on separate days over a few years. Not sure where you got "mass suicide" from. It's not mentioned in the comment you refer to.

Wait, this was apparently misreported to me although it still says wonders about the situation. It was a threatened mass suicide that led to concessions. Over a dozen did jump to death. And the worst part of what I originally received.... curtailing the suicides by installing safety nets instead of better working conditions... did happen.

So, yes, that's unusually bad with not many in the U.S. that can compare. I'll be interested if you know any companies in the U.S. where over ten people have jumped off one roof with company installing safety nets.

I doubt it'll happen in the US because we don't really have workers dormitories for people to jump from and in the US very few people jump for suicides (~2%) vs guns (~56%), suffocation/hanging (~25%) or poisoning (~11%).

source: http://lostallhope.com/suicide-statistics/us-methods-suicide

Ok, that makes more sense. So, I modify the question to be U.S. workers threatening mass suicide by gun or whatever with a good number at one plant over time. Then, the plant starts taking preventative measures against various suicide equipment instead of investing in working conditions.

This actually has more odds of happening.

You'd probably have to go back a ways to at least the early 1900s I'd guess to get the right combination of horribleness to get that. These days workplace suicides are relatively rare 1-2 per million workers. Also being poor sucks but US workers are waaay more mobile than a rural Chinese person who move into a company town from their home town/village so before they'd get to 'I'll kill myself in protest' they'll probably get to 'I'll change jobs or quit' first.

That's what I'm thinking. Commenter talking like the situation in China and in the U.S. are equal seemed way, way off.

My university started locking the balcony doors of its library building after a suicider jumped off. Nobody complained that they should have provided better studying conditions for students and left the doors open. It seemed like a completely sensible and thoughtful thing to do to prevent more suicides.

I've been inside Chinese factories and they seem just like factories anywhere else. Americans need to stop imagining China as some giant North Korean slave camp. It's got very low unemployment, a huge middle class and quite reasonable working hours, pay and job mobility, especially for young people like those Foxconn workers. Health and safety is a wash though but that's another matter.

It's the Chinese workers telling us all of this. In most democracies, people just say they don't like the job they have or try to get another one. The stuff we hear about Foxconn et al is unusual. The sources are Chinese over there working at such places and/or immigrating here to U.S. to get away from the stuff. So, we figure it's probably true.

Of course, China could always reduce their media censorship so we can get honest coverage of everything. Then, we might know more. :)

I have a private global (excluding USA) medical insurance that covers costs (no in-patient) up to 1M and it costs me $1k/year. I've been hearing about Obamacare for years and always thought "well, it's good that more people will have insurance". But when my colleagues in US told me what their deductibles on a good insurance plan are (thousands of dollars. my deductibles are $375) I was floored.

The whole medical system in US is broken. This morning I had a strange thought... I need to prepare for trips to US the same way I'd prepare for going to a third-world country: by buying a special medical insurance! It's one of the important TODO items when going to certain countries.

Fun fact: I can get a medical insurance that covers US with deductibles in low hundreds of dollars by doubling my not-so-high premium. As an expat. How crazy it is that I can get a better deal on insurance in US than local people?

Wait. Of course your insurance is cheap, it excludes in-patient care. You know, the most expensive part of medicine.

If it were legal in the US, no in-patient care insurance would be pretty cheap as well. I'll agree not as cheap as ex-US, but a hell of a cheaper than Obamacare plans.

America subsidizes the health care of the entire world. Because such a large portion of health profit comes from the US. If the US ceased to exist then global prices would increase and global research would decrease.

I hear this line repeated a lot on HN (it appears multiple times in this thread even), yet I've never seen a study or any hard evidence for it. How do you know that the massive profits made by drug companies in the US are being reinvested into drug development, and not simply returned to their sharedholders? Do you have any sources for this claim?

Plenty of research on this topic and hard evidence abounds.

Regarding US share of research funding versus the rest of the world, this is well established... Public funding and private profits are the two big US sources of medical research dollars. The NE Journal of Medicine reports that the US funds about half of all global medical research spending, and that's split approximately evenly between public and private funding.

Here's [1] a CBO paper on the topic of pharma R&D spending / reinvestment which is also worth a look. R&D as a percentage of sales ("research intensity") is higher in pharma than almost any other industry, and increased significantly in the 80s and has held constant since then.

[1] - https://www.cbo.gov/sites/default/files/109th-congress-2005-...

Just saw this. Thanks for the link, it was an interesting read. It did feel like the authors leant heavily towards justifying currently spend rather than taking a critical view on it. It also didn't go very deep into R&D spend vs shareholder profit, instead trying to point out all possible places where profit was being over-accounted for and R&D costs were under-accounted.

I'd argue that US practice damages healthcare systems everywhere with the defensive practice of ordering every test and scanning every system to avoid liability. It contaminates thought processes where a 1 minutes pause would generate some level headed thought.

> America subsidizes the health care of the entire world.


Because profit is disproportionately earned in America. Europe, Canada, and the whole world enjoy lower prices because we pay higher prices.

I don't need to agree or to disagree, but I need to ask: why downvote the parent without offering any replies?

(Upvoted, just out of the feeling of irritation at this.)

HN seems to be getting worse by the day. If I could delete my account and all its comments I would.

Pharmaceutical companies have an average profit margin of about 17%. That's about the highest by industry in the world. I think it's more accurate to say that America subsidises the profit margins of pharmaceutical companies.

Important to note is that that profit margin is after taking into account that pharmaceutical companies spend more on advertising than they do on research. How about we just take out the profit margin, take out the advertising and give the money directly to universities who already do a lot of the research and then make the results freely available? That way US citizens on HN will still be able to feel superior about subsidising the healthcare of the 'entire world' and everyone will have access to low cost generics.

Right now US citizens are basically subsidizing other countries when it comes to drug revenue via price gouging. I would rather it be done via some other more explicit mechanism (e.g. India government subsidies) rather than at the expense of poor healthcare availability to people in the US.

Considering that Americans consume 75% of the world's prescription drugs, and I think it safe to assume an equivalent amount of non-prescription drugs, I don't think any of this makes much difference. The US is a very strange and unique drug market.

Citation: "5 percent of the United States is the world's population and consumes 75 percent of the the world's prescription drugs."


(And by "Americans" I and the gov included all those people in the US market who are not "US citizens". Ie me.)

That statistic seems a little misleading to me, because very large parts of the world don't consume any prescription drugs at all, because they're too poor to go to the doctor.

Yeah, but that's not going to happen. If a big pharm company doesn't provide India-priced versions of drugs, the Indian government just declares the patent invalid and lets generics produce it for free (yes, this happens).

Sounds like a good decision by india

Yeah, until the US decides that it will retaliate by, for example, adding a 100% import duty to all goods produced in India and no longer supplying visas to Indian citizens.

I don't think such retaliation will ever happen. Many lobbyists will be waiting in the hallway of US Senate before ink of the signature dries.

Yes but not a good decision for everyone else. Someone has to pay for the development of these drugs.

India wouldn't be able to either way.

That sounds terrific?

> Right now US citizens are basically subsidizing other countries when it comes to drug revenue via price gouging.

I am ok with that. They can take even more taxes out every month if it means people get access to better healthcare.

Does it bother you that Europe and the rest of the developing world also free-ride subtantially?

Not particularly.

By the way pharmaceutical companies also free ride on public universities. Research is often done there. Even if it is from grants, it often means professors end up working and spending their time for pharma companies instead of doing other things like teaching students.

Moreover, if our goal is to win hearts and minds and I don't know, promote Democracy (at least that is what the propaganda tells us), isn't providing health saving medication or building hospitals or schools working towards that goal better than say overthrowing their government or threatening to invade.

Going back to Western Europe, I hear it is already possibly to go to Germany (or was it Norway) and attend a 4 year university there for free. Isn't that free riding So they can have our pills and we can go there and not pay $200k in student loans. Globalization and free markets, we learned that was a good thing, right ...

But pharma companies aren't competing in a free market... I can't by (prescription X) from a canadian drug store. So it's not globalized, except for the protectionist patent laws and treaties surrounding them.

It's time to reign in patent protections, specifically regarding extension patents, and bring in compulsory license maximums for prescription medicines. Give drug companies 5 years exclusivity once they react market... after that they can only charge X per day for licensing... imho that should probably be $10/day/prescription, and drop every year.

Price controls work so well in general, why not try them in pharmaceuticals?

I'd much rather eliminate patent protections, but they do serve limited value.. the licensing restrictions for medications after 5 years at market is mainly to limit patent protections, while still providing some profit. I didn't say the company couldn't make agreements for higher, or lower amounts via contract arrangement.

Patent protections, in this case, and many others actually exceed the value they provide to larger society, so I'm in favor of limiting them in this case as opposed to removing them entirely. I understand there are a great amount of expense, but that is usually recouped within 3-5 years, and often in medication less than that.

Earlier competition will lead to better pricing structures that are less restrictive over marginalized costs. In effect benefitting consumers.

The key point in the constitution behind copyright and patents are "limited" exclusivity... those limits don't always have to be larger... sometimes they need to be smaller, and some industries aren't the same as others.

By the way pharmaceutical companies also free ride on public universities.

Free ride? You think pharmaceutical companies just come along and pluck the best drugs for free? No, they out-license it from the university and pay royalties.

How else would Northwestern University build a brand new chemistry building from their Lyrica royalties?

Well, it's evidently cheaper for them to get it from a public resource than actually, you know, developing it from their own labs.

So nice for them to be able to pick and choose the successful research while not having to absorb all the other, less interesting research funded with public money.

I don't really get your complaint. The pipeline from basic research to sellable drug generally takes longer than the 20 year patent lifetime. So it's impossible for drug companies to get reimbursed for the entire drug development pipeline. Rather, at a crude level, the process is split in half: first do the basic research (funded by public money), then build on the basic research and demonstrate a viable drug (incentivized by patent-protected drug sales). The value-added by drug companies is substantial regardless of wether you think some other organization could do it better.

Complaining that drug companies are free-riding on public research is like complaining that the local 7-11 is free-riding on the public safety provided by police officers.

Where is your basis for this statement? Pharmaceutical industry profit margins are about 17% which about the highest of any industry. Pharmaceutical companies spend more on advertising than research and development. Looks less like Europe and the rest of the world are free riding and more like the US is being conned.

No because the free riding is not actually substantive.

How so? The primary development incentive for the large majority of new drugs is the patent-protected revenue in the US.

Sadly most of that money is spent on marketing [1] and most new drugs are just minor tweaks to existing compounds [2], much safer bets than brand new approaches.

[1] https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

[2] http://healthaffairs.org/blog/2015/07/06/serious-risks-and-f...

Hyperbole seems to be getting worse on HN.

First off, no, marketing is not where most of the money is spent. Second, marketing spend has a positive ROI, so they get more money back than they spent.

Lastly, this entire discussion is about a wonder drug that cures a terrible disease and you claim most new drugs are minor tweaks.

Although those two points are interesting and relevant, my statement doesn't conflict with them.

Or are you claiming that Europe isn't meaningfully free-riding simply because new drug development just isn't valuable, and we'd be better off with much less drug research? I think that's a defensible claim, but it's very contentious and should be stated clearly if you believe it.

Don't worry, with the Trans Pacific Partnership Agreement (TPPA) we are all signing up for we have agreed to be gouged deeply. New Zealand.

India can break patents on drugs it considers too expensive. The real danger is if this sort of thing makes drugs unprofitable pharma companies won't spend any money researching drugs to treat uncommon conditions, and the drug will never exist to start with.

We'll get endless varieties of new opioids, blood pressure pills, pecker perkers, and not much else.

I always hear this argument, but never any evidence to back it up. Is it simply regurgitating econ 101? There must be some economic incentive? Any time people die from a disease, that alone creates an incentive for those left living to find a cure.

What econ doesn't teach is that people are not perfectly rational creatures. Just like we will find people who will write code for free, who will make music for free, there will always be people who are searching for cures for the sake of searching for cures.

I don't buy the argument that only Big Pharma who can deliver cures. As the article pointed out, Gilead didn't develop the cure. They bought the company that did.

>There must be some economic incentive? Any time people die from a disease, that alone creates an incentive for those left living to find a cure.

No matter how altruistic you are, as a private company you can't put billions of dollars toward a drug that's going to lose money.

>I don't buy the argument that only Big Pharma who can deliver cures. As the article pointed out, Gilead didn't develop the cure. They bought the company that did.

... which they would not have done without the expectation of a profit.

I don't think anyone is arguing only Big Pharma creates new cures. In fact, most big pharma companies acquire smaller companies for their drugs.

That said, I don't disagree that money is the only motivator. However, good intentions aren't enough to develop a new drug. It takes a hell of a lot of money as well.

If you don't create incentives for private investment, then you need to get that money somewhere else.

lol, where do you think drug companies do research? That's right in India.

"..not to license the manufacture of these drugs in India"

And then India can purchase/void their domestic patent, allowing generic brands to fill the market the original creator decided to abandon.

I think you should be conflicted for a slightly different reason :-)

Should Americans pay for a disproportionate share of pharma revenue? I for one am so happy for all the medical research that we fund in this country, it is probably the best thing we can possibly do for the world. Of all the American foreign aid and foreign intervention, very little else will compare to the amazing impact of widespread access to Harvoni/Sovaldi in India. That is truly an amazing gift that America is giving to India, and it's made possible exactly by extreme price discrimination.

This is an amazing miracle cure for a deadly disease. My understanding is that it cost a lot of money to develop, and took a lot highly skilled work, and involved a fair measure of risk of total loss. We want wins like this to be rewarded. We want a significant fraction of the dollars this drug earns to ultimately be re-invested in more of this kind of R&D. We definitely want more drugs like Harvoni/Solvaldi coming to market.

So the conflict I have is, when manufacturing is not the bottleneck, you want to get this cure out to people everywhere, but at the same time you can't afford to pay for it all to happen in one year. So you see cases like OP where they won't pay for the treatment until you are showing symptoms. But the cure is so easy, nobody wants to wait for symptoms, and how can you blame them?

Compulsory licensing under TRIPS means that India can allow manufacturing without running afoul of international trade law, though if enough non-Indians started doing this it could cause some headaches due to the "predominantly for domestic use" clause. But in reality there's no way that pharma companies can stop developing countries from manufacturing critical medicines.

I agree the real problem is the high cost.

It can be solved by extending patents in return for lower prices. Then the government must enforce patents internationally by putting pressure on countries that ignore patents.

Another concern is poor quality from knockoff manufacturers. You can partially solve that by lowering costs because the original product becomes more competitive. You can also try to apply pressure on countries that don't honor patents.

You can complain about the cost, but you can't just make pharma companies sell their products for less because you believe they are too expensive. You need to give them a reason to believe that they can continue to sell a good product and make money off of the research investment they put in. You also need to give them incentive not to make small changes to drugs to renew patents when the original version of the drug might be a better version.

Granted, it is sick when people make an excessive amount of money at the expense of those most in need. But, most of the bad that happens in pharma is due to suboptimal patents and suboptimal patent enforcement.

But stronger patent protection won't improve pricing... competition will. I think we should reduce extension patents to 5 years, and possibly even have compulsory licensing fees ($10 per day, per prescription for the first year, $8 for the second ... 6... 4... down to $2, then $1) for prescription drug patents starting at 5 years. And the penalty for an insufficient patent application for a third party to properly apply within the first 8 years would mean a loss of said patent.

What about drugs that cost more than $10 per day to produce? Hell that's only $3650 per year. How many manufacturing plans can sustain themselves on that sort of revenue, particularly if they are creating a drug for a disease that only affects 1000 patients in the world?

One of the reasons why generic drugs prices jumped so much in the last few years, if because manufacturers said "screw this" and just stopped making the drugs because the margins were so low.

The $10/day was for the licensing to the patent holder, not a cap on the cost of the drug to the consumer. This is about reducing patent protections on drugs to 5 years after market, and compulsory license caps after that, in order to encourage competition, not a price cap over production costs in a free market.

Without competition, you get inflated pricing.

Curious about the last part. How does that work? If they make small changes and get patents based on the new formula, won't other companies be allowed to use the original formula?

I'm guessing somehow both formulae are covered by the renewed patent, but that is wrong on so many levels.

"and the pharma company actually felt a significant drain in revenue, they may decide not to license the manufacture of these drugs in India at lower prices"

But thats the thing. There will be no drain in revenue as they make money in the US by selling for $84K while they make money from the sales in India as well due to licensing agreement (albeit a bit less revenue).

Overall, still a pretty good deal for these pharma companies if you ask me otherwise why would they even do such a deal with India ?

Well, my point was that if everyone decided to source it through India, they will no longer sell anything for $84k. Even if 10% of people did that, their profits will slip enough for them to notice and take action.

Lots of research in the US is university and government lab-based. Even if private sector drug development were cut back, it would not end useful drug development. I suspect the way government and university research is monetized could be improved so that more competition would exist.

Let's say we shut down Silicon Valley and had the government do computer research. You think that would be efficient and effective?

At the end of the day, you need to give smart people a reason to make their lives' work saving lives instead of selling financial products or advertising algorithms. That's not going to happen if going into drug development means topping out at GS-15 in a government lab.

Let's say we stopped exclusive licensing for government funded research. Then, when commercialized, drugs would be available from multiple competing sources. Or the IP could be set free, for generics manufacturers to pick up.

Maximizing rent-seeking doesn't seem like the wisest course of action.

How funny that you mention that, given that the Internet, the very backbone upon so much of the economy moves around, started and developmed mostly as... a military project. Supported by universities and public research.

The market paid Cisco and the like to develop the ever advancing hardware that powers the internet as it exists today.

Sure they did, because corporations are much better at iterative product improvements than at radical, high-risk research projects with no short-term returns. So?

Please list all of the drugs that public money has brought all the way to market. It's not that long.

What exactly is "gouging?" The average wedding in the U.S. is almost $30,000. Average new car price is $33,000. Is $84,000 one-time an unreasonable price for a complete cure to a chronic disease?

That's a strawman argument and you know it. A car is financed over 5 years. You can't get financing on pharmaceuticals. The "average" wedding is an equally bad comparison and your figure is wrong - average is actully 26K with majority of weddings under $10k:


It is absolutely reprehensible behavior. If $1,500 is a reasonable price point and profit margin for a company elsewhere in the world then $84K in another part is simply outrageous.

> A car is financed over 5 years. You can't get financing on pharmaceuticals.

As a matter of economics, the value of something doesn't (or shouldn't) depend on how easy it is to get financing for that thing. In fact, your financing example cuts the other way. That $33k new car is actually worth more like $40k to the buyer, because that's how much they pay after financing it. The market shows that people value an average new car at > $40k. So how is it unreasonable to say that the value of a Hep-C cure is at least $84k?

> It is absolutely reprehensible behavior.

Gilead is saving lives. Apple is making money hand over first selling shiny trinkets that nobody really needs. Which is the reprehensible one? What you're basically saying is that a company should make less money for creating products that fundamentally help humanity. That's crazy!

People should be able to get these drugs, even if they can't afford it. That's the difference between iPhones and Sovaldi. But it's the government's job to make that happen--the companies shouldn't be forced to basically be private charities.

Or Gilead is exploiting dying people desperate to save their lives and have enough money to do so, while letting the rest die. And then I'm sure they are lobbying the government to make sure it won't do anything about it.

Meanwhile, Apple is selling luxury products that people can buy if they would like to. And those that can't, survive just fine without one.

So the company that is saving some lives is more reprehensible than the one that is saving no lives? Companies that create life-saving things should be charities, while companies that create things everyone can "survive just fine without" should be richly rewarded. Right? That doesn't seem backwards to you?

It's not like Sovaldi grows on trees, free for the picking, and Gilead came along and fenced-in the trees and now is charging $84,000 for access. It created a cure to what used to be a terminal disease. It should be rewarded in proportion to the value of curing the disease.

Yes, the company that actively prevents people from obtaining life-saving medicine for billions extra in profit is more reprehensible than the company that makes no pretenses about having anything to do with life and death.

Creating the cure was admirable, what it has done with it is reprehensible. It certainly has the right to make a significant profit. But a monopoly on medicine paid for by dying people with no other options does not accurately establish the value of curing the disease.

> Yes, the company that actively prevents people from obtaining life-saving medicine for billions extra in profit is more reprehensible than the company that makes no pretenses about having anything to do with life and death.

So the moral impact of a company's actions depends not on the net good done by that company, but on the "pretenses" it does or does not put on? It's morally better to waste natural resources on frivolities like new iPhones every year, instead of saving some lives (but not all)?

And if it's morally reprehensible to not save a life when you have the power to do so, aren't all of Apple's customers morally reprehensible for buying iPhones? That money could literally save the life of someone in the world that lacks basic necessities.

> And if it's morally reprehensible to not save a life when you have the power to do so, aren't all of Apple's customers morally reprehensible for buying iPhones? That money could literally save the life of someone in the world that lacks basic necessities.

No, the decision to make billions extra in profits on top of the billions they would already be making at the cost of millions of lives is still definitely more reprehensible than someone spending a few hundred dollars more than they otherwise would on an essential device that provides information, communication and entertainment instead of giving it to someone less fortunate.

Apple made $18 billion in profits last quarter. For half of that, they could have saved 2.7 million people from dying of malaria. In one quarter alone.[1] Apple's customers spent about $45 billion on iPhones last quarter. If they had gotten Android phones for half the price (which still provide essential information and communications), they could have saved 5 million children by investing in children's health programs.[2]

If it's reprehensible to have the means to save a life and not do so, then Apple and its customers are reprehensible. This is the natural consequence of your reasoning. The only distinction you can make between Gilead and Apple is that Gilead invented the means of saving lives, while Apple would have to pay someone else to do so. But how on earth does that count against Gilead? Why is Gilead evil for making profits when they could save lives by giving away Sovaldi, when Apple could just as easily save lives by buying Sovaldi for those who need it?

[1] It costs about $3,300 to save a life from malaria: http://www.techinsider.io/the-worlds-best-charity-can-save-a....

[2] It costs $4,200 to save a child by investing in childhood health: https://www.sciencedaily.com/releases/2015/07/150703072652.h....

I think we'll have to agree to disagree here. Your argument is totally valid economically, but I'm arguing the morality of it. I certainly don't think all companies and consumers should be providing every surplus dollar to helping others.

If this were a free market system where competition has resulted in $84k being the price at which it makes sense to produce then so be it. Instead, the company can lobby to make sure the government, who we both agree should be involved here for the public good, never gets involved and buy out any company that challenges its monopoly. Then, it can take advantage of global markets for additional profits, while the people who are actually dying can't and have two options - death or debt.

Why does everyone pretend that iPhones are a luxury? They are not. It's merely 800€. Even the drug in india still costs twice as much.

> merely 800€

I honestly can't tell if you're being sarcastic or not. I hope so...

If all the poor people got naturally selected out then there won't be poor people anymore.

You may or may not have noticed that extreme poverty and hardship doesn't lead to less offspring, in fact the opposite occurs. Look at birth rates between wealthy and poor countries or groups.

Hope you're trolling, but speeding up the process for the most vulnerable in our society is extremely inhumane

Huh? Who said anything about "value"? You are the one who mentioned car pricing not me. My point is that cars are peoples single largest purchases outside of home ownership and for most people the only reason that is even viable is because a source of financing exists.

Why are you dragging iphones and Apple into this? You are way off point.

"the companies shouldn't be forced to basically be private charities." Wow, I don't anybody has ever compared a big pharma company to a private charity before. I had to reread that sentence twice.

How about Martin Shkreli the CEO of Turing Pharmaceuticals who overnight raised the price of an AIDS drug from $13.50 to $750.00 a pill overnight? Is that OK? He shouldn't in your words "be forced to basically be private charity" right?

>As a matter of economics, the value of something doesn't (or shouldn't) depend on how easy it is to get financing for that thing.

When interest on mortgages shrinks the house prices will become inflated. In fact it's smarter to buy a house durng a time of high interest at 400k and later refinance with a lower interest rate than to buy the same house for 800k at a low interest rate without posibility of even cheaper refinancing.

If Gilead charged $1500 in every country it wouldn't have been worth to invest in the first place.

Remember they paid $11B for the right to the drug and they still had to bring it through development.

Surely the right to the drug was only worth $11B in the first place because of $84k possibilities at the other end? If it was only ever going to be $1500, that $11B would have been adjusted accordingly.

Yes, for the affluent those are what you typically spend. You clearly have never been seriously ill with a chronic condition. I have to take a drug every six weeks (remicade) that costs $17,000 each time for the rest of my life. I'm 23. Let that sink in. This is the state of affairs in the US. It's horrid, I didn't ask for Crohn's disease, but I'm being punished for it.

I have Cystic Fibrosis. Orkambi is the closest we've been to a cure (treating it at cellular level). Retail: $260,000 a year. However, I pay $15/month. (insurance + manufacturer subsidy). Many of my other medicines (which would cost another $100k+) are similar. I picked one of the better insurance packages (about $375/mo); I pay another $100-200 a month in copays to get $400k or more in medicine.

I'm also in the US. Why is my experience so much different than yours?

(edit: some punctuation)

I'm sorry you have to take remicade for the rest of your life, but remicade won't cost $17k each time for the rest of your life. Generic versions of remicade are already available in Europe, and will be available in the US not later than Sep 2018 (when the patent expires, but in fact a biosimilar has already been approved by the FDA and could be launched "at risk" at any time).

On the other hand, it's likely that better treatments for your condition are developed in the future and at that point you will complain about how expensive those new drugs are.

must me nice in your bubble that $84,000 as a one time payment is reasonable. normal people can't get a loan for something like this, and obviously don't have cash stored away for something like this, and like the article mentioned, the op won't get covered by insurance even though he's done his part and paid insurance premiums. he clearly had no other options. glad you drive a $33k car. seems like the op doesn't.

Don't misinterpret my point: I think the government should absolutely pay for necessary medical treatment like this.

But, it's important not to confuse what are actually two different inquiries: what is the fair price for a Hep-C cure, and how do we make sure those who need get it. The first is a purely economic question, not a moral one. Otherwise you create a perverse incentive structure: people make lots of money creating things people don't need (a new iPhone model every year), while people make much less money creating things people do need (breakthrough cures).

Do you think charging $300K for a liver transplant is gouging too? Because that's what this $84K drug just replaced.

Yes, $300k is even more unconscionable.

Medicine in the US is wwaaaaaaaaaaay overpriced. Things that are critical for life needs to be priced at a reasonable flat rate above costs, and conducted with the attitude of public service and human actualization. Let big pharma reap their R&D costs some other way

> Let big pharma reap their R&D costs some other way.

That's easy: they'll just cut R&D and manufacture generics or toothpaste or something that is cheaper.

> Let big pharma reap their R&D costs some other way

How?! You think they should create a social network for doctors? A billion dollars in ad sales is somehow morally better than a billion dollars from saving lives? They're making their money by saving lives, and being criticized for it. You're effectively saying that they shouldn't do any R&D, like the Indian generic drug companies.

Sorry for the exclamation points. I think that you have a particular system of morality, that is more important than saving lives. To me this is like arguing for abstinence-only sex education, which demonstrably does not work. I wish in general people would be more willing to look at data and outcomes.

I'm not in that industry, I'm sure my ideas aren't very good.

* massive step up in grant funding to front-load R&D costs so they're paid by the time the drug is out, or

* worldwide medical R&D fund, bounties for individual re-searchable issues, or

* move private R&D to universities, have profits gained pay back R&D, send any extras to researchers, and shutter R&D aspect of private medicine

At least I'm trying to think of alternatives, and not just trying to shoot other commenters down

I don't have a problem with your ideas. I think the vast majority of drug development costs are being borne by industry right now. So when you say "massive step up in grant funding," that might have to be something like a 100x funding increase. And the NIH budget has been flat (when adjusted for inflation) since 2002 [1], so there doesn't seem to be much political will for your suggestions. (And that's bad! Even if you could get your suggestions passed, long-term stagnant government funding for R&D would stall drug development.)

I think your ideas should be implemented first in another country, such as India or somewhere in Europe, so that we can see how well they work before throwing away the baby in the bathwater. Personally, I would prefer more gradual changes here in the US. For example, the cost of running drug trials has been increasing. Big pharma companies like this; going through the drug trial obstacle course is their specialty, and the huge barrier means that small drug companies that do the pre-trial drug research have to go through the big companies to get to market. Reducing these costs would lead to more competition.

[1] http://www.aaas.org/page/historical-trends-federal-rd#Agency

Indeed, lack of political will kills many things :/

Minor correction: the total bill for a liver transplant is more like $700-800K, medical alone (not including personal costs such as loss of productivity or wages).

And more importantly, much like student loans, even if OP was able to get a loan, it prevents him/her from taking other loans - say, for that car.

Economically crushing people (and removing them from normal economic activity by way of crushing debt) hurts the entire economy except for the pharma industry.

The median lifetime earnings in the US is $1.7 million or so [1]. $84 thousand is 5% of that. 5% of all the money you will ever make is a lot, considering that most of that money is already accounted for by college tuition, housing, and transportation. Also consider that this is a lump sum, that you weren't planning for it, and that this may happen in the middle of your life when you've only made a fraction of all the money you will ever make.

[1] https://cew.georgetown.edu/wp-content/uploads/2014/11/colleg...

I think you need to factor in that it's not the individual personally paying 5% of their earnings, the personal cost is simply one year of your insurance out-of-pocket max. Anyone and everyone should be ready, willing, and able to pay for one year of whatever their out-of-pocket maximum is in order to access a miracle cure for a terminal illness.

The better question is what are insurance companies actually paying and how much should they have to pay? And then we get to the actual reason the drug is priced so high... it's because it is actually less expensive per cured human than all the alternatives. At $84k, this drug is actually saving insurance companies money per-cure.

The problem is that the cure is so damn good that everyone wants it right away, where-as the previous choices sucked badly so only a small percentage of the inflicted even went for it. Exactly how the OP describes, the cure is so good and so free of side-effects, patients want it even before they are showing symptoms of the disease! Of course the insurance companies can't afford to cure the planet of HepC all in one year -- there has to be a way to spread the (lower) cost over time.

But you can choose to have a cheap wedding, and choose to buy a used car.

You can also choose to not share dirty needles.

Choose not to share ? A lot of times it is difficult to tell and if you have dishonest nurses like the one below [0], what do you then ? Victim blaming is easy but people can get infected not due to their own fault.

[0] http://www.nj.com/healthfit/index.ssf/2015/10/eeuw_nurse_in_...

The #1 killer in the US is heart disease, but insurance companies cover those medicines quite readily, despite the fact that one can choose not to eat fast food or smoke.

That's not the only way to get it bud.

are there really people this naive lingering on this forum?

There are many other ways to get hepatitis C. For instance, it is not an unknown phenomenon that drug addicts use needles as a weapon. Errors in healthcare, e.g. needles or blood transfusions.

You're essentially saying it's ok to price out large segments of the population for life-saving medication. This is life or death, not a new Audi versus a used Hyundai. There is an ethical consideration that your analogues ignore.

At some point, the price of a thing is related to the resources a person can bear on a task. People are priced out of better lives all the time - cars, jobs, where they live, what they eat. Its the way society works. To make medicine a special case, with the govt providing infinitely deep pockets, is irrational. Inconsistent with how we run everything else anyway.

Yes I believe studying, working, getting ahead ought to give me and my family a better life. Else what's the point? Its not just a game with points; its survival. Its supposed to work that way. If money doesn't buy the most important things, then we need some new system of exchange that does buy important things.

> People are priced out of better lives all the time

But again, this is not what we're debating. It's why the "average car price" does not apply.

Clearer: its not 'ok' that segments of the population are 'priced out'. Its just economics. Life is hard.

Look everybody knows it's economics that drives this. That's not the point. We have mechanisms in place that can isolate certain aspects of life and remove them from the capitalist machine.

On a grand scale it's socialized medicine but even on a smaller scale it's health insurance. And it's why hospitals don't kick out a dying person just because they're destitute. What we're talking about isn't "why does medicine X cost $Y?" Most people understand that.

And that's why it's unfair to compare life-saving medication to buying a luxury vehicle.

And insurance isn't ever going to level the playing field completely. Some things are just too expensive. It was asked Why? I know its not a free market. And there's a difference between luxuries and life-saving procedures/medicines. But some things cost a lot, and some folks will be able to afford them and some not. And that's not a mistake or a problem with the system.

A better comparison is the several hundred thousand for the not as good treatment, a liver transplant.

There's still lots of room for a policy discussion. Can we develop such cures and pay less for them?

Most of the criticism against drug companies is that while they invest x for R&D and actual manufacturing, they earn back at least 100*x in profits. I don't think there are many other industries that allow this to happen.

I'm not entirely familiar with what makes pharma patents that much different from software (you don't really have a monopoly even if you own a software patent), but that's basically what's happening.

Once a company gets a patent, free market rules no longer apply, and they are free to price their drugs as they want.

> while they invest x for R&D and actual manufacturing, they earn back at least 100*x in profits.

If that is true, VC's money will be flooding over pharmaceuticals instead of Silicon valley. This "100x" number probably fails to account for the vast number of failed trials that is all cost and no profit.

Typically quoted values are (in the current market), approx. $2-3B per product brought to market.

Drug development is incredibly difficult -- for very good reasons. The FDA has to be risk-averse in order to protect the health of the public and to prevent harm to be done.

More cynically, the FDA has to be risk-averse because people get much more upset over "this person died because the FDA approved a bad drug" than over "this person died because the FDA didn't approve the drug that would have saved her".

That's 2x to 3x the before-tax income of your average non-tech-employed American. Are you kidding?!?!

But isn't it worth two or three years of income to save your life? It seems absolutely worth it to me, frankly a much better value than almost anything I spend money on (I mean, Netflix?).

Not if people who can't afford it have their lives ruined simply because they can't afford it

How is someone's life ruined by the existence of a treatment option that didn't exist before?

"Average" is just that. There are many car options cheaper than the average, and many wedding options cheaper than the average. There are no other cheaper options for this drug except what the OP did.

Agreed, it makes sense. And people buying it from India is like going to Vegas to get married in a drive-through chapel or going to the judge. Free market doing its thing it seems.

Two of these are things where you have cheaper alternatives, and also the option to not do them at all. The third is something where you must buy this specific thing, or you die. That third thing costs substantially more than most U.S. households make in a year.

I guess the moral issue is that we have medical insurance, we don't have wedding insurance and car purchase insurance. I guess you could argue that the author did have insurance and brought the price down to $6,000... after his liver was diseased.

Eminent domain is not just for land. In extreme cases like this where a profit motive is the only thing keeping us from curing huge numbers of people, the US government should write a single check, take the rights, and start handing out pills.

As far as the company is concerned, that could even be a preferable outcome. Cash now and the marketing benefits to promote its other drugs.

Edit: Just a reminder that eminent domain requires paying the property owner. https://en.m.wikipedia.org/wiki/Just_compensation

Let's walk through this. Drug develop is mostly funded with private money. Yes, the NIH funds basic research that often support drug research, but private companies fund most of the bill. It's in the hundreds of billions each year.

Now why would they do that? Well, they expect that they'll give a company $500M and it will turn into $2B or $3B. However, most of those companies will fail and the $500M will turn into $0.

So that would mean that the returns on the drugs that are successful need to be really high. What if they weren't? Well, all that private money would dry up pretty dam quickly.

Look at the money going into cancer research. It's a huge amount every year. It's not just because cancer is a terrible disease and affects everyone, it's because the returns on cancer therapy are high.

You could just tell private companies, "stuff it, you don't get to make money" and try and have the gov't do it on their own. Of course you'd need to increase the NIH budget by what? 10x?

Our current system isn't perfect, but it does a dam good job aligning the incentives of people with money and people who need new drugs.

As someone who works at a university and does work for drug trials, I don't agree that they are fully privately funded. They use university staff much of the time, and those staff are not paid market rate. They get equipment hire at academic rates rather than commercial rates too. Just thought I'd add my 2c.

I agree, violently. Protecting the researching company's incentives is hugely important. Otherwise we're getting the current crop of drugs at the expense of future drugs.

Eminent domain requires "just compensation" that courts interpret as fair market value. Since the company that created the drug was recently acquired there's a really easy number to put on it.

I think the government should put a value on every life (or quality adjusted life year, whatever), and offer to pay that much for any drug that saves lives.

From that perspective, $84k per life saved doesn't sound that unreasonable, and creates a huge incentive to develop similar drugs in the future.

But I don't think valuing every life at $84k would be sustainable. And why should the drug company itself get to determine the price, with no upper bound?

> And why should the drug company itself get to determine the price, with no upper bound?

Because they took the financial risk to develop the drug.

Sure. But if they demanded a trillion dollars per pill, the government shouldn't have to pay for it. It would bankrupt the country. They shouldn't be able to set a price and force the government to pay it.

The only reason we have this crazy system is because people refuse to put an economic value on life.

> if they demanded a trillion dollars per pill

Then nobody would buy it and they would lose their investment.

> force the government to pay it

They can't force the government to do anything. Of course, the government can just take the pills from them, but if they did that, then no more cures would be developed.

> people refuse to put an economic value on life

People do all the time. Every time you (and everyone else) make a decision of risk vs cost vs utility, you do. For example, some cars are safer than others. How does that influence what you'll pay for a car?

You missed the part where insurance companies and government programs are obligated to pay for treatment regardless of costs. A limit needs to be put on this. E.g. spending a million dollars on a treatment that is only decreases the risk of death by 5% puts a $20 mil value on life, which is too high. I don't know what the number should be, but it's something we need to decide.

> regardless of costs

Anything with that phrase in it inevitably leads to major problems, along with other phrases like "zero tolerance" and "safety always comes first".

>Of course, the government can just take the pills from them, but if they did that, then no more cures would be developed.

There seems to be a common misunderstanding of how eminent domain works. The Constitution requires "just compensation", which the courts interpret as fair market value.

The investors and the courts may have very different notions of the fair market value. If it's much less than the investors expect, expect no more cures. Consider that the whole point of the government taking it is the idea that the fair market price is too high.

Also, there are many, many ways the government can take things without just compensation. For example, civil asset forfeiture. They could get the patent declared invalid. Laws and regulations are very complex, there are a lot of levers the government can pull.

The point of the government taking it is that when there's only one seller people get greedy. That's why both sides have recourse of the courts.

Considering the lives at stake, intentionally paying 20% more than the estimated value would be a better deal than the current system.

Price controls have a very long history of unintended negative consequences. Keep in mind that the cure was developed with the expectation of high profits, and with no cure all the lives at stake would have died.

Suppose a cure for Alzheimer's never happens because price controls were put on the Hep C cure? Are you willing to risk it?

The price will come down after the patent expires. People are better off with a high priced cure than no cure.

Scientists are not profit motivated. Scientists don't work to produce more drugs faster just because the CEO is managing better. This is definitely something that can be funded by the public and should be funded completely by the public on a not-for-profit basis. Then we can no longer make these sort of ridiculous economic arguments.

Do they hand out sainthoods with PhDs now? A scientist working in the commercial sector has the same motivations as anyone else.

Then why not make any scientist who discovers any very important drug or therapy into a billionaire. If they are motivated the same way corporations are, then that should super motivate them produce more drugs faster. In fact why don't universities work the same way?

Scientists at pharma companies who make breakthrough discoveries are well rewarded in stock and bonuses.

Scientists are not profit motivated.

You haven't met the scientists I've met then.

When you're working at a start-up and have options for a few hundred basis point of equity, you can be dam sure they are profit motivated.

Which drugs are produced by startups? As far as I know most drugs are produced by massive incumbents. The cost and the regulation is too much to do anything else. And as far as I know those incumbents are not turning their researchers that research those drugs into millionaires or billionaires.

I would wager that most drugs are discovered by startups. Pharma has a very well established "farm team" system where venture-backed companies do the compound discovery and complete Phase I and perhaps Phase II trials, then get bought by one of the major players, for exactly the reason you mention -- nobody wants to rebuild the infrastructure to manufacture and sell pharmaceuticals.

However, the founders of those startups are rewarded handsomely for their effort, assuming they are successful.

You don't have to bring a drug to market to make money on your equity. Acquisitions are the main route by which big pharma acquires a drug.

Scientists may or may not be profit motivated. But you can sure afford a lot more scientists to work on a problem, and give them much nicer labs, and pay for expensive animal and human trials, insurance, etc.

> In extreme cases like this where a profit motive is the only thing keeping us from curing huge numbers of people, the US government should write a single check, take the rights, and start handing out pills.

Yeah, but, as your own link notes, courts (and the constitution) require fair market value for compensation. This doesn't save you any money at all; eminent domain can only have an impact when someone is refusing to sell at the market price. But Gilead is very very happy to sell at the market price. The issue is people upset at what that market price is.

If the US government could come up with the fair market value of the exclusive rights to manufacture Harvoni and Sovaldi, the problem wouldn't exist, because the same amount of money could also just buy all the doses of Harvoni and Sovaldi on the open market.

> As far as the company is concerned, that could even be a preferable outcome. Cash now and the marketing benefits to promote its other drugs.

Oh sure, they'd love for the US government to buy a million doses at $84k each and start handing them out. I don't think that solves any problems though.

Edit: Wait, or is your comment actually just an argument for single payer healthcare, and I'm just being obtuse? If so, my apologies for missing the joke, and I think you're right: The most obvious role for the government is funding universal catastrophic care, and I think this should be a part of that.

Yes, it amounts to single payer healthcare for drugs.

It's different from the government buying individual doses on the market because the current price is set to achieve the fair market value of the drug by treating a small subset of infected patients. Manufacturing costs are so small in comparison, we could treat everyone for nearly the same price.

We could do that. On other hand, we could just pay them the expected market value of the drug when they first invent it then give it to public for almost nothing.

"You can cure cancer with those three drugs? Was going to make tens of billions? Here you go: guarantee of tens of billions of subsidies over next 20 years in exchange for the patent and license for anyone to produce it generically."

Boom! Tens of thousands of lives saved a year. Way better than investing into the TSA. :)

When you say "we pay the market value" and "give to the public for almost nothing", "we" and "the public" are the same group and therefore it makes no sense to make the distinction.

Unless by "we" you mean "the wealthy" and "the public" you mean "the poor", in which case the increased tax that has to be set up for that will just be reverted into the cost of the service/good provided by the wealthy, the wages of their employers, or turn into capital flight, and so forth. In short, you're basically taking money from other areas of people's lives and making them put it into health care. Which could be achieved by themselves by saving, if that's what they wanted to do.

I live in the U.S. if I didn't mention it. Here, we differentiate between the rights of the public as a whole and private individuals. Businesses and I.P. tend to be a form of private property. So, "we" the public can't take what "we" consider private. That's a contradiction.

In this specific case, it's the public paying money to private parties for their property to move into public hands. Then, that public property is manufactured to be distributed to the many, private parties in need that constitute the general public.

Agreed, that's exactly what I'm trying to suggest :) Eminent domain requires paying the property owner.


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